Mortgage Recruiting and Recruitment Training and Coaching

I have read a lot of articles recently about the quality of loan officer hires. There has been a trend over the last few years for companies to recycle low end originators.

Think about this, with an estimated 1.1-1.3 trillion dollar mortgage originations market in 2015 (which is flat from 1.1 trillion in 2014) there is an estimated over population of loan officers of upwards of 35% in 2015. At the end of 2014 there were approximately 398,716 loan officers licensed in the NMLS which is down only 2% from 404,239 in 2013, but total mortgage originations dropped from 1.85 trillion in 2013 to 1.12 trillion in 2014, a 64% decline (according to IMF). Those numbers just do not match up! No wonder according to the Mortgage Bankers Association (MBA), the 2014 average productivity per loan officer was at a dismal 2.4 loans per month or under 30 loans a year. That cannot be acceptable moving forward.

More importantly is which of these loan officers are really doing the originations? According to the STRATMOR Group’s 2014 Originator Census Survey, the top 20% of loan officers originates 57% of the overall loan volume. The next 20% originates 23% of the overall loan volume. The next 20% originates 13% of the overall loan volume. So that means the top 40% of all loan officers originate 80% of the volume and the top 60% of all loan officers originate 93% of the overall loan volume. That means that bottom 40% of all loan officers only originate 7% of the overall loan volume. The monthly average productivity of loans closed per loan officer correlates as well as the top 20% average 8 loans per month, the 2nd 20% average 3.2 loans per month, the next 20% average 2.0 loans per month. The bottom 40% does less than 1 loan per month.

Additionally when we will look at the 1rst year turnover ratioof these different groups, the bottom two tiers (40%) have in excess of a 40% turnover ratio (why not 100%), the next 20% tier up has about a 25% turnover ratio, the next 20% tier has under a 15% turnover ratio and the top 20% tier have a less than a 10% turnover ratio (the top 10% have under a 5% turnover ratio).Locating the needle in the haystack is a term that comes to mind.

Now do the math, the bottom 40% minus the attrition of 2% of the loan officers that left the NMLS system in 2014 results in a potential of a 38% over population of loan officers still in the industry today. Therefore, even taking the high estimate of a 1.3 trillion dollar mortgage originations market in 2015, this is only a 2% increase in volume which still results in a 36% over population of loan officers in the industry today.

Turnover is not only expensive; it has many other negative consequences. Now let us look at some of the true cost to you and your organization

IT HURTS:

YOUR SALES CULTURE

EMPLOYEE’S MORALE

YOUR COMPANY’S BRAND & REPUTATION

THE MANAGER”S PERSONAL BRAND & REPUTATION

BECAUSE OF LOST SALES OPPORTUNITIES

PRESENT AND FUTURE CUSTOMER RELATIONSHIPS

CREATES A SUBSIDIZED SALES CULTURE, BY SUBSIDIZING THE LOW PERFORMERS WITH THE BETTER PERFORMERS

WEAKENS YOUR VALUE PROPOSITION FOR THE BETTER PRODUCERS

Why has the industry had such a slow attrition rate?The answer is a Subsidized Compensation Plan and Unwillingness to Right Size Loan Officer Headcount. By that I mean, if you are willing to pay an inflated commission plan to below average performers that do not want or need to make a great living, why would they leave? Let’s go back to the MBA’s 2014 industry’s averages; productivity per loan officer was at 2.4 loans per month or under 30 loans a year. And the average loan amount nationally was approximately $235,000.00. That means the typical loan officer closed 6.8 million in closed volume which generated an income of between $47,600.00 @ 70bpts up to $68, 0000.00 @ 100bpts. That is at or above the medium income level for most of the individual states in the United States. There is a problem of over paying the lower producing loan officers. The exception to this is anyone in their first 18-24 months in the industry. The average age of the loan officer today is over 54 and companies need to make the continued investment in building a future sales force with the younger generations. By stopping the recycling of loan officers in the bottom tiers, companies would then have the money to invest into their present loan officers (you should already know their strengths and weaknesses) that are high potentials, make quality offers to the better loan officer candidates in the market and invest into their future sales force (building from the ground up is not cheap). It is simply having the right allocation of investment dollars aliened with the greatest potential return.

Secondarily, if companies just want to continue swap and exchange the bottom half of the loan officers’ talent pool, those candidates will continue to accept the 90-180 day guarantees and forgiven draws until they run dry. How many times have you heard this “yes this loan officer candidate is marginal, but with my leadership and our value proposition we can help them improve their production by 50%.” Zebras just do not lose their stripe no matter what we want to believe.

Unless companies start to institute minimum standards that correlate with the appropriate compensation levels for the generated results, the problem will persist. The root cause is unrealistic and/or overstated sustainable company growth goals driven by a headcount mentality that fosters a reactionary hiring culture. What happened to on boarded volume as a metric? Hiring three15MM a year producers will always be better than eight 6 MM a year producers. Quality not quantity should be the driver of your loan officer recruiting.

The solution is to manage out the bottom 25% (less than 2 units a month) of your loan officer now; examine the next 25 % (under 3.5 units a month) for your high potentials and invest in them and create a plan to help them grow their business 30% per year over the next 24 months (that will get them to over 5 units a month over the next two years). Target only the loan officers that reside in the upper 50% to 90% of the industry based on monthly productivity and monthly origination volume (there are approximately 160,000 loan officers within this talent pool). Clearly define your ideal loan officer candidate target profile within this group. Align your company’s value proposition to make a difference to these candidates on how your company can help them grow their business moving forward.

Lastly, build relationships with top 10 % and try to create a top of mind rapport with them, as in this candidate driven market, this group totally control’s their own destiny and you just want an opportunity to engage with them if the occasion arises. Let your competitors fight over all the other loan officers, as it will keep them distracted while you build a higher quality sales team that will want to stay with you. Quality candidates stay with quality companies if they are underwritten and aligned correctly.

This market demands companies to adapt their recruiting efforts to the present environment. Hiring is now becoming more of the Art than a Science. Historically this has shifted between which side of the Ying and the Yang the hiring needs of Mortgage Lenders are at any time. This is largely influenced by factors such as the market and the talent pool and more so today than ever in the history of mortgage lending by government regulations among other influences. This is not a normal shift of going from refinance market to purchase market; it is a whole lot bigger than that. We are looking at a different set of models that are developing. Yes Branch Managers need to have a strategy, a process and maintain accountability and consistency (the science), but now more than ever in the last 15 years they need to know exactly how to Identify, underwrite, qualify and close (the art) the best candidates that they engage with. Even the most experienced Branch Managers have developed ineffective recruiting and hiring practices over the last 15 years for this new market and need guidance back to the art of recruiting and how to position themselves as the buyer throughout the recruitment cycle. With all the newly placed regulations and the disruption of the mortgage lending landscape there will be a lot of under or unqualified candidates seeking new positions within the Mortgage Banker Driven Model as suppose to the Mortgage Broker Driven Model. Just as there will be High Volume Producers that may be such a disruptive hire that it will be the undoing of that Branch. Understanding what Recruiter’sFool’s Gold looks like, will just as important as disseminating who they need to let go of with their current loan officer staff. Retention starts at recruiting and the art of recruiting will end at future retention. Over 65% of Branch Manager’s have never had formal recruitment training with a Qualified Recruiting Coach and therefore lack the advance recruiting skills to be more than an average recruiter no matter how many goals and systems you put in front of them. And yes technology has its advantages, but the art of Recruiting Loan Officers is a voice to voice interaction transitioning to a face to face experience and finalizing in a person to person process. People work for people and that adage has not changed and until Artificial Intelligence is fully developed, that will not change. How to fully engage your candidate and truly underwrite their ability to fit within your company’s culture and to succeed with the products, pricing model, operational support, technology, the tools provide and local leadership will be crucial to any individual branch’s long-term growth and success. If you want to learn more please contact me @ chuckcowan@ccowan.com or 321-363-4384.

This market demands companies to adapt their recruiting efforts to the present environment. Hiring is now becoming more of the Art than a Science. Historically this has shifted between which side of the Ying and the Yang the hiring needs of Mortgage Lenders are at any time. This is largely influenced by factors such as the market and the talent pool and more so today than ever in the history of mortgage lending by government regulations among other influences. This is not a normal shift of going from refinance market to purchase market; it is a whole lot bigger than that. We are looking at a different set of models that are developing. Yes Branch Managers need to have a strategy, a process and maintain accountability and consistency (the science), but now more than ever in the last 15 years they need to know exactly how to Identify, underwrite, qualify and close (the art) the best candidates that they engage with. Even the most experienced Branch Managers have developed ineffective recruiting and hiring practices over the last 15 years for this new market and need guidance back to the art of recruiting and how to position themselves as the buyer throughout the recruitment cycle. With all the newly placed regulations and the disruption of the mortgage lending landscape there will be a lot of under or unqualified candidates seeking new positions within the Mortgage Banker Driven Model as suppose to the Mortgage Broker Driven Model. Just as there will be High Volume Producers that may be such a disruptive hire that it will be the undoing of that Branch. Understanding what Recruiter’sFool’s Gold looks like, will just as important as disseminating who they need to let go of with their current loan officer staff. Retention starts at recruiting and the art of recruiting will end at future retention. Over 65% of Branch Manager’s have never had formal recruitment training with a Qualified Recruiting Coach and therefore lack the advance recruiting skills to be more than an average recruiter no matter how many goals and systems you put in front of them. And yes technology has its advantages, but the art of Recruiting Loan Officers is a voice to voice interaction transitioning to a face to face experience and finalizing in a person to person process. People work for people and that adage has not changed and until Artificial Intelligence is fully developed, that will not change. How to fully engage your candidate and truly underwrite their ability to fit within your company’s culture and to succeed with the products, pricing model, operational support, technology, the tools provide and local leadership will be crucial to any individual branch’s long-term growth and success. If you want to learn more please contact me @ chuckcowan@ccowan.com or 321-363-4384.

Why Loan Officer Recruiting and Retention are One in the Same
Outside of regulations, talent is the second crisis facing the Mortgage Industry today. There are huge advantages in hiring talented employees, who already know the local market and some examples of those advantages are:
Talent is the one sustainable advantage you can get in this business. Any other advantages like operations, products or pricing are not really an advantage since the competition can catch up in those areas. Thou those three areas are critical in having a strong value proposition in recruiting. Knowing who the players are and where they work provides valuable insight that cannot be had anywhere else. Such hires know how their former employer thrived or struggled in areas like operational efficiencies, attracting and retaining customers and expanding wallet share with existing clients. Those items will be of great interest to your company as they create an advantage in the market. Hiring talented employees from rivals that serve in revenue-producing roles is ideal. Mortgage Companies that rank talent acquisition and talent retention are undoubtedly far more successful and profitable than their competitors who don’t. You have to win with better execution, and that always comes down to people.
And those advantages will be used against you, if you and your company do not support a robust recruiting culture. So it is critical that companies take steps to make sure that highly regarded loan officers and valuable managers stay put. And that starts at recruiting!

Research has shown that most Branch Managers and Sales Managers in the Mortgage Lending Industry do not have a formally structured Recruiting Pipeline that they use daily, week in and week out. It is where you would keep score and you can track your progress and ultimately your team’s growth. To be successful as a Sales Leader you are always growing your team or as the saying goes “Either you are growing or you are going”. And by going, that does not mean you are going anywhere positive. Loan Officer Recruiting is a 24/7 aspect of any Branch Manager’s duties and the managers that are successful at recruiting understand that. Having a Recruiting Pipeline is as vital to the manager as a Loan Pipeline is to the Loan Officer. To have a snap shot of your recruiting activities in one centralized place that you can check the needed recruiting actions on a daily basis, is the cornerstone of successful recruiting. It is where you record and track all relevant recruiting information, such as how many suspects have you sourced, how many of the suspects do you convert to prospects and in turn how many of those prospects become qualified candidates? What should a pipeline consist of? To understanding that, realize that there are six basic phases in recruiting process and those distinct phases with abbreviated explanations are:

Phase One Suspects (Sourcing)

Phase Two Prospects (“Getting to know one another” and establishing mutual interest)

Phase Five- Offer and Close (Formal Offer and Acceptance with Start Date Confirmation)

Phase Six- Counter-Offer and On-Boarding (Walk the new hire through resignation to starting date and mentoring over the first 90 days or so).

Recruiters and Mortgage Companies all use different terminology for all these phases but the key is to have a central place to list of all Suspects that you have ever sourced and how did you source them. Then listing those that you converted to Prospects and the time that it took and then the percentage that then become a Candidate, not only can you see what areas in the recruiting cycle that you excel at but also the areas that you can still grow and develop. It will also give you the elapsed time from first contact to this point in the recruiting process; additionally it will offer you insight to how much recruiting activity that you require to meet your hiring goals, it also should give you a baseline of recruiting activities and conversation ratios that are needed to get Candidates to the interviewing process. This is a lot of data and insight to what you need to accomplish to reach this crucial point in the recruiting cycle. But now, this is the half way point, it is when theInterviewing Processreally starts, but not the Recruiting Process. That started back at Suspects and this is the forgotten first half of the Recruiting Pipeline. What we see as a major stumbling block to Loan Officer Recruiting, is how the Branch Managers get evaluated on, as to their recruiting activities. That usually starts at the “Candidates Phase” and how many Loan Officers are they in the process of Interviewing and how many Hires have they made year to date. That is not “putting the cart before the horse”, that is not having a horse and only having a cart with one wheel. These first sections are where most of the real recruiting activities happen but this is not where the glory of recognition is. Unless companies start recognizing the most labor intensive part of the Recruiting Pipeline it will continue as the most neglected part of the recruiting activities that their Sales Leaders do.

Over the past 25 years, CCowan & Associates has established itself as the “go-to” team for mortgage banking recruitment and retention training. Using the innovative, customizable, and dynamic training process our talented coaches have perfected in those twenty-five years, we deliver successful retail mortgage sales recruitment and retention training that encompasses multiple levels of mortgage sales—from originators and sales managers to branch, area, regional, divisional, and C-level leadership in the retail and wholesale mortgage industry. Our satisfied customers will tell you that no other consulting firm in the mortgage sales arena can deliver the return on investment that CCowan can and does.

The CCowan Process

Our remarkably successful training model is so effective because it focuses on one goal: delivering measurable results through process tracking and accountability. Here’s how it works: the initial, introductory call between a CCowan coach and one of your mortgage sales professionals will be followed by weekly sessions during which our coach will use accountability-based metrics to review the previous week’s activities, progress, and results of your manager to ensure that she or he fully engages in the training process, consistently applies and learns to adapt its methods, and reliably follows through to achieve your recruitment goals.

What Makes CCowan Right for You

CCowan doesn’t offer outmoded, vanilla, “one-size-fits-all” training. Instead, we custom-tailor a unique training program for each of our clients and each of our participants so that our individualized, one-on-one coaching system produces measurable results, whether your recruiting manager is a rookie recruiter or has years of proven, successful hiring experience. In addition, our coaching process is scalable company-wide, and can be systematically and strategically delivered to an entire retail sales management team. Because we build this flexibility into our training process and because our coaches are experts in the field, we can guarantee that our training is not only the best mortgage-banking recruiting training available at any price, but also the best investment you can make in your employees’ and your company’s success.

How to Get Started

Call me today at 321-363-4384, and let me show you the better, more profitable recruiting results your team can achieve through one of the cost-effective recruitment-coaching solutions available through CCowan & Associates! If your recruiting managers are doing well, we can take them from good to great. If your company is experiencing high sales-team attrition, or your managers are not delivering the results you need for growth at this critical time in the mortgage business, we will show them the path to recruitment and retention success. When I share with you the details of our process, our record of success, and what we can achieve for your company, I know you’ll want to take the next step: an in-depth Recruiting Core Competency Evaluation to determine how much your managers can benefit from the game-changing CCowan & Associates’ recruitment training program.

About Chuck Cowan and CCowan and Associates

CCowan & Associates is a relationship based recruiting firm specializing in the Mortgage, Banking, and Financial Services industries. We bring over 100 years of combined consulting experience to a broad spectrum of clients, ranging from medium and regional-sized companies to the largest, best, and brightest of the Fortune 100. CCowan & Associates owns a reputation for bringing “High Impact Players” to our clients. Our placements have driven billions in funded production volume and millions in profit to bottom lines. Additionaly, partnering with best-in-class organizations has provided a preferred first choice destination for top performers. This has resulted in a tremendous increase to the Value Proposition our partners have taken to the market. Our firm offers a full suite of customized, fee-based recruitment services. If your company mission is to achieve sustainable, profitable results then CCowan & Associates wants to be your results-driven recruiting partner.
For organizations wishing to adopt a more self-sufficient recruitment strategy, CCowan also delivers the expertise, experience, and curriculum to individually train recruiting managers to build their own teams successfully and autonomously. CCowan & Associates has expanded our menu of services to include individualized coaching and training for Branch, Area, and Regional Managers. This cost-effective, high value strategic partnership achieves an exceptionally better quality of hire, resulting in increased production. It has also enhanced both management and subordinate retention rates. The “Identify, Underwrite, Recruit, Hire and Retain” CCowan behavioral model becomes a part of our clients’ cultural fabric.

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